[Important Notice](index=3&type=section&id=Item%20I.%20Important%20Notice) The company's board, supervisors, and senior management guarantee the accuracy and completeness of this quarterly report, which remains unaudited - The company's board of directors, supervisory board, and all senior management ensure the truthfulness, accuracy, and completeness of this quarterly report and bear corresponding legal responsibilities[4](index=4&type=chunk) - Liu Baolin, the company's head, Xu Yingzheng, the person in charge of accounting, and Xia Xiaoyi, the head of the accounting department, guarantee the truthfulness, accuracy, and completeness of the financial statements[4](index=4&type=chunk) - This company's Q3 2019 report is unaudited[4](index=4&type=chunk) [Company Profile](index=4&type=section&id=Item%20II.%20Company%20Profile) This section provides an overview of the company's key financial performance, operational highlights, and shareholder structure for the reporting period [Key Financial Data and Operating Performance](index=4&type=section&id=2.1%20Key%20Financial%20Data%20and%20Operating%20Performance) In Q1-Q3 2019, operating revenue grew **15.11%** to **73.379 billion yuan**, and net profit attributable to shareholders increased **32.05%** to **1.019 billion yuan**, driven by sales growth and government subsidies, with operating cash flow improving **35.84%** Financial Indicators (Q1-Q3 2019) | Indicator (Q1-Q3 2019) | Amount | Y-o-Y Change | | :--- | :--- | :--- | | Operating Revenue | 73.379 billion yuan | +15.11% | | Net Profit Attributable to Listed Company Shareholders | 1.019 billion yuan | +32.05% | | Net Profit Attributable to Parent Company Excluding Non-recurring Items | 0.862 billion yuan | +26.14% | | Net Cash Flow from Operating Activities | -2.711 billion yuan | +35.84% | | Basic Earnings Per Share | 0.55 yuan/share | +30.95% | Business Segment (Q1-Q3 2019) | Business Segment (Q1-Q3 2019) | Operating Revenue (billion yuan) | Y-o-Y Growth | | :--- | :--- | :--- | | Pharmaceutical Wholesale and Related Businesses | 70.7378 | +15.75% | | Pharmaceutical Retail | 0.1357 | -6.41% | | Pharmaceutical Manufacturing | 0.1105 | +4.80% | | **Total** | **73.1995** | **+15.07%** | Product Segment (Q1-Q3 2019) | Product Segment (Q1-Q3 2019) | Operating Revenue (billion yuan) | Y-o-Y Growth | | :--- | :--- | :--- | | Western and Chinese Patent Medicines | 56.8940 | +12.87% | | Chinese Herbal Medicines and Decoction Pieces | 2.5617 | +5.79% | | Medical Devices and Family Planning Products | 11.3314 | +44.40% | | Food, Health Products, Cosmetics, etc. | 2.4124 | -17.93% | - Total non-recurring gains and losses for the reporting period amounted to **0.156 billion yuan**, primarily from government subsidies of **0.142 billion yuan**[9](index=9&type=chunk)[10](index=10&type=chunk) [Shareholder Information](index=7&type=section&id=2.2%20Shareholder%20Information) As of Q3 2019, the company had **27,217 shareholders**, with the top three being Shanghai Hongkang, Chuchang Investment, and Lion Dragon International, and the controlling shareholder having a high proportion of pledged shares - As of the end of the reporting period, the company had a total of **27,217 shareholders**[11](index=11&type=chunk) Major Shareholder Name | Major Shareholder Name | Number of Shares Held | Percentage of Total Share Capital (%) | | :--- | :--- | :--- | | Shanghai Hongkang Industrial Investment Co., Ltd. | 437,441,118 | 23.30 | | Chuchang Investment Group Co., Ltd. | 221,113,898 | 11.78 | | Lion Dragon International Group (Hong Kong) Co., Ltd. | 213,894,000 | 11.39 | | Zhongshan Guangyin Investment Co., Ltd. | 132,624,583 | 7.06 | | Beijing Dianjin Investment Co., Ltd. | 102,763,876 | 5.47 | - Among the top ten shareholders, Shanghai Hongkang, Chuchang Investment, Beijing Dianjin, Zhongshan Guangyin, and their controlling shareholders have affiliated relationships or constitute concerted parties[12](index=12&type=chunk) [Preferred Shareholder Information](index=8&type=section&id=2.3%20Preferred%20Shareholder%20Information) As of the end of the reporting period, the company had no preferred shareholders - The company had no preferred shareholders at the end of the reporting period[12](index=12&type=chunk) [Significant Events](index=9&type=section&id=Item%20III.%20Significant%20Events) This section details major changes in financial statement items, the progress of significant corporate actions, and the fulfillment of commitments [Major Changes in Key Financial Statement Items and Indicators and Their Reasons](index=9&type=section&id=3.1%20Major%20Changes%20in%20Key%20Financial%20Statement%20Items%20and%20Indicators%20and%20Their%20Reasons) During the reporting period, the company experienced significant changes in financial indicators, including a **159.55%** increase in construction in progress due to reclassification of properties, a **429.41%** surge in long-term borrowings from a World Bank loan, a **51.19%** rise in financial expenses, and a substantial **85.83%** decrease in net cash flow from financing activities due to debt repayment and share repurchases Major Changes and Reasons | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Construction in Progress | +159.55 | Part of the properties' use changed from inventory to self-use construction in progress accounting | | Long-term Borrowings | +429.41 | Received World Bank loan | | Treasury Stock | +122.29 | Company repurchased shares | | Financial Expenses | +51.19 | Expanded business scale, increased interest expenses from bank borrowings and asset securitization | | Investment Income | +148.04 | Increased investment income from equity method accounting and disposal of subsidiary investments | | Other Income | +109.09 | Increased government subsidies | | Net Cash Flow from Financing Activities | -85.83 | Significant increase in cash paid for debt repayment and share repurchases | - Changes in several balance sheet items resulted from the company's adoption of the newly revised "Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments" from January 1, 2019, introducing new accounts like "Financial Assets Held for Trading" and "Receivables Financing," while discontinuing old accounts such as "Available-for-sale Financial Assets"[14](index=14&type=chunk) [Progress of Significant Events, Their Impact, and Solutions Analysis](index=10&type=section&id=3.2%20Progress%20of%20Significant%20Events%2C%20Their%20Impact%2C%20and%20Solutions%20Analysis) During the reporting period, the company advanced a **2 billion yuan** preferred share private placement, repurchased **39.77 million shares** for **550 million yuan**, and secured a **1 billion yuan** IFC loan, while the controlling shareholder issued **1 billion yuan** in exchangeable bonds to reduce share pledges - The company plans to privately issue no more than **20 million preferred shares**, raising a total of no more than **2 billion yuan**, with the application accepted by the China Securities Regulatory Commission on October 11, 2019[16](index=16&type=chunk) - The company implemented a share repurchase program, having cumulatively repurchased **39.7687 million shares** (2.12% of total share capital) for a total of **550 million yuan** as of September 30, 2019[17](index=17&type=chunk) - Controlling shareholder Chuchang Investment plans to issue exchangeable corporate bonds totaling no more than **1 billion yuan** to adjust its debt structure and reduce its share pledge ratio, with the pledge ratio for its concerted parties expected to decrease to **68.11%** upon completion[18](index=18&type=chunk) - The company received a **1 billion yuan** long-term loan from the International Finance Corporation (IFC), a member of the World Bank Group, on July 10, 2019, with an 8-year term and a comprehensive interest rate of **4.55%**[20](index=20&type=chunk) [Overdue Unfulfilled Commitments During the Reporting Period](index=12&type=section&id=3.3%20Overdue%20Unfulfilled%20Commitments%20During%20the%20Reporting%20Period) During the reporting period, the company had no overdue unfulfilled commitments - The company had no overdue unfulfilled commitments[20](index=20&type=chunk) [Performance Forecast Warning](index=12&type=section&id=3.4%20Performance%20Forecast%20Warning) The company has not issued any warning regarding a potential cumulative net loss or significant change in net profit from the beginning of the year to the end of the next reporting period compared to the same period last year - The company has not forecasted a cumulative net loss or significant change in net profit from the beginning of the year to the end of the next reporting period[20](index=20&type=chunk) [Appendix](index=13&type=section&id=Item%20IV.%20Appendix) This section includes the unaudited financial statements for Q3 2019, details on adjustments due to new financial instrument standards, and a statement on the absence of an audit report [Financial Statements](index=13&type=section&id=4.1%20Financial%20Statements) This section presents the company's unaudited Q3 2019 financial statements, including consolidated and parent company balance sheets, income statements, and cash flow statements, reflecting the financial position as of September 30, 2019, and operating results and cash flows for the first three quarters of 2019 [Consolidated Balance Sheet](index=13&type=section&id=Consolidated%20Balance%20Sheet) As of September 30, 2019, the company's total assets were **67.691 billion yuan**, a **1.53%** increase from the end of the previous year, while total liabilities were **47.270 billion yuan**, and net assets attributable to listed company shareholders decreased by **3.32%** to **17.854 billion yuan**, primarily due to perpetual bond payments and share repurchases Consolidated Balance Sheet Summary | Item | September 30, 2019 (yuan) | December 31, 2018 (yuan) | | :--- | :--- | :--- | | Total Assets | 67,691,136,014.12 | 66,674,253,350.59 | | Total Liabilities | 47,269,695,578.56 | 46,292,251,257.71 | | Total Equity Attributable to Parent Company Owners | 17,854,134,941.21 | 18,467,103,509.01 | [Parent Company Balance Sheet](index=15&type=section&id=Parent%20Company%20Balance%20Sheet) As of September 30, 2019, the parent company's total assets were **40.438 billion yuan**, total liabilities were **25.176 billion yuan**, and total owner's equity was **15.261 billion yuan**, showing a decrease from the end of the previous year Parent Company Balance Sheet Summary | Item | September 30, 2019 (yuan) | December 31, 2018 (yuan) | | :--- | :--- | :--- | | Total Assets | 40,437,598,554.62 | 40,628,870,789.93 | | Total Liabilities | 25,176,373,039.95 | 24,461,187,994.99 | | Total Owner's Equity | 15,261,225,514.67 | 16,167,682,794.94 | [Consolidated Income Statement](index=18&type=section&id=Consolidated%20Income%20Statement) In the first three quarters of 2019, the company achieved total operating revenue of **73.379 billion yuan**, a **15.11%** year-on-year increase, with total operating costs of **72.198 billion yuan**, and net profit attributable to parent company shareholders reaching **1.019 billion yuan**, up **32.05%** Consolidated Income Statement Summary | Item | Q1-Q3 2019 (yuan) | Q1-Q3 2018 (yuan) | | :--- | :--- | :--- | | Total Operating Revenue | 73,378,823,740.22 | 63,746,017,068.81 | | Operating Profit | 1,316,832,956.27 | 1,020,201,771.00 | | Total Profit | 1,322,329,393.35 | 1,027,260,015.42 | | Net Profit Attributable to Parent Company Shareholders | 1,018,557,167.44 | 771,365,970.22 | [Parent Company Income Statement](index=21&type=section&id=Parent%20Company%20Income%20Statement) In the first three quarters of 2019, the parent company achieved operating revenue of **9.795 billion yuan**, a **9.25%** year-on-year increase, with net profit of **782 million yuan**, up **4.86%**, and investment income being a significant component at **1.003 billion yuan** Parent Company Income Statement Summary | Item | Q1-Q3 2019 (yuan) | Q1-Q3 2018 (yuan) | | :--- | :--- | :--- | | Operating Revenue | 9,795,496,081.98 | 8,966,040,178.66 | | Investment Income | 1,002,595,533.25 | 675,291,476.42 | | Net Profit | 781,667,836.22 | 745,456,405.21 | [Consolidated Cash Flow Statement](index=23&type=section&id=Consolidated%20Cash%20Flow%20Statement) In the first three quarters of 2019, net cash flow from operating activities significantly improved to **-2.711 billion yuan** from **-4.226 billion yuan** in the prior year, with net cash outflow from investing activities at **782 million yuan**, net cash inflow from financing activities at **545 million yuan**, and cash and cash equivalents balance at **4.565 billion yuan** at period-end Consolidated Cash Flow Statement Summary | Item | Q1-Q3 2019 (yuan) | Q1-Q3 2018 (yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -2,711,178,582.95 | -4,225,944,026.25 | | Net Cash Flow from Investing Activities | -782,306,123.90 | -1,176,041,252.37 | | Net Cash Flow from Financing Activities | 544,526,104.98 | 3,841,979,507.15 | | Cash and Cash Equivalents at Period End | 4,565,377,468.66 | 3,999,118,553.15 | [Parent Company Cash Flow Statement](index=25&type=section&id=Parent%20Company%20Cash%20Flow%20Statement) In the first three quarters of 2019, the parent company's net cash flow from operating activities significantly improved to **-1.905 billion yuan** from **-3.449 billion yuan** in the prior year, with net cash inflow from investing activities at **208 million yuan**, and net cash outflow from financing activities at **310 million yuan** Parent Company Cash Flow Statement Summary | Item | Q1-Q3 2019 (yuan) | Q1-Q3 2018 (yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -1,905,390,914.13 | -3,449,388,477.50 | | Net Cash Flow from Investing Activities | 208,001,338.72 | -814,591,762.06 | | Net Cash Flow from Financing Activities | -310,069,343.61 | 2,992,324,810.12 | [Adjustments to Opening Financial Statements upon First-time Adoption of New Financial Instruments Standards](index=26&type=section&id=4.2%20Adjustments%20to%20Opening%20Financial%20Statements%20upon%20First-time%20Adoption%20of%20New%20Financial%20Instruments%20Standards) In accordance with the Ministry of Finance's new financial instrument standards, the company retrospectively adjusted its financial statements as of January 1, 2019, primarily reclassifying financial assets and receivables, which impacted opening retained earnings - The company adjusted its opening financial statement items for 2019 in accordance with the new financial instrument accounting standards issued by the Ministry of Finance[45](index=45&type=chunk)[49](index=49&type=chunk) Major Adjustment Items (Consolidated Statement) | Major Adjustment Items (Consolidated Statement) | Before Adjustment (yuan) | After Adjustment (yuan) | Change Amount (yuan) | | :--- | :--- | :--- | :--- | | Financial Assets Measured at Fair Value... | 967,432.61 | 0 | -967,432.61 | | Financial Assets Held for Trading | 0 | 260,815,503.10 | +260,815,503.10 | | Notes Receivable | 1,380,150,886.41 | 146,590,955.44 | -1,233,559,930.97 | | Receivables Financing | 0 | 1,233,559,930.97 | +1,233,559,930.97 | | Available-for-sale Financial Assets | 291,832,213.80 | 0 | -291,832,213.80 | | Investments in Other Equity Instruments | 0 | 76,776,460.00 | +76,776,460.00 | | Undistributed Profits | 5,320,574,225.20 | 5,352,398,117.24 | +31,823,892.04 | [Explanation of Retrospective Adjustment of Prior Period Comparative Data for New Financial Instruments and Lease Standards](index=32&type=section&id=4.3%20Explanation%20of%20Retrospective%20Adjustment%20of%20Prior%20Period%20Comparative%20Data%20for%20New%20Financial%20Instruments%20and%20Lease%20Standards) The company did not retrospectively adjust prior period comparative data for the first-time adoption of new financial instrument and lease standards - The company did not retrospectively adjust prior period comparative data for the first-time adoption of new financial instrument and lease standards[50](index=50&type=chunk) [Audit Report](index=32&type=section&id=4.4%20Audit%20Report) This quarterly report is unaudited - This financial report is unaudited[50](index=50&type=chunk)

Financial Performance - Operating revenue for the first nine months reached CNY 63.75 billion, a year-on-year increase of 17.05%[6] - Net profit attributable to shareholders decreased by 19.22% to CNY 771.37 million, primarily due to a significant increase in non-recurring gains in the previous year[6] - The basic earnings per share decreased by CNY 0.17 to CNY 0.42[6] - The net profit excluding non-recurring gains increased by 23.20% to CNY 683.72 million[6] - The total comprehensive income for the first nine months was CNY 760.97 million, down from CNY 959.05 million, a decrease of approximately 20.6%[39] - Net profit for the first nine months was CNY 778.20 million, compared to CNY 967.97 million in the same period last year, reflecting a decrease of about 19.6%[38] - Operating profit for Q3 was CNY 299.97 million, an increase from CNY 226.66 million in Q3 of the previous year, marking a growth of approximately 32.3%[38] - The total operating costs for the first nine months were CNY 62.85 billion, up from CNY 53.70 billion, representing an increase of approximately 16.9%[37] Assets and Liabilities - Total assets increased by 16.97% to CNY 60.88 billion compared to the end of the previous year[6] - Total current assets increased to ¥51.52 billion from ¥43.47 billion, a growth of approximately 18.5%[29] - Total liabilities increased to ¥41.26 billion from ¥32.51 billion, reflecting a growth of approximately 27.0%[31] - Total liabilities amounted to CNY 26.61 billion, an increase from CNY 15.41 billion year-on-year, indicating a growth of about 72.3%[34] - The company's total equity as of the reporting date was CNY 15.98 billion, a slight decrease from CNY 16.37 billion year-on-year, reflecting a decline of about 2.4%[34] Cash Flow - The net cash flow from operating activities improved by 15.59% to -CNY 4.23 billion compared to the same period last year[7] - Cash flow from operating activities improved by 15.59%, reaching -RMB 4,225,944,026.25, due to increased collection of receivables[18] - The company's cash flow from operating activities for the first nine months of 2018 was ¥67,148,945,279.77, up 15.4% from ¥58,112,694,518.88 in the same period of 2017[44] - The net cash flow from operating activities for the first nine months of 2018 was -¥4,225,944,026.25, an improvement from -¥5,006,612,332.96 in the same period of 2017[44] - Total cash inflow from operating activities reached 54,292,273,489.98 RMB, an increase from 39,097,206,609.57 RMB year-over-year[47] - The total cash outflow from operating activities was 57,741,661,967.48 RMB, compared to 42,766,534,444.54 RMB in the previous year[47] Investments and Strategic Initiatives - Revenue from pharmaceutical wholesale and related businesses grew by 17.16% to CNY 61.11 billion[8] - Revenue from medical devices and contraceptive products surged by 61.17% to CNY 784.74 million[10] - The company plans to publicly issue corporate bonds not exceeding RMB 1.2 billion to improve debt structure and financing channels[20] - The company signed a strategic cooperation agreement with Tencent Cloud and Donghua Medical Technology to develop an "Internet + Medicine" ecosystem, focusing on a prescription information sharing platform and drug distribution solutions[22] - A strategic cooperation agreement was signed with Ping An Health Medical Technology to explore an "Internet + Medical + Pharmaceutical" service chain, enhancing sales and service capabilities in grassroots medical institutions[23] - The company plans to invest in 42 "Jiubu Pharmacy" locations across 31 provinces, with a total investment not exceeding RMB 84 million, holding 60%-70% equity in each pharmacy[24] Shareholder Information - The total number of shareholders at the end of the reporting period is 24,054[13] - The largest shareholder, Shanghai Hongkang Industrial Investment Co., Ltd., holds 437,441,118 shares, accounting for 23.30% of total shares[13] - The controlling shareholder, Chuchang Investment Group, increased its stake in the company by 10.215093 million shares, accounting for 0.544% of the total share capital, with a total investment of RMB 164.18211 million from February 9 to August 8, 2018[21] Accounts and Receivables - Accounts receivable increased by 50.86% to RMB 23,802,616,812.16 compared to the end of 2017, due to expanded sales and longer payment terms from hospital clients[17] - Prepaid accounts increased by 42.86% to RMB 3,689,489,227.64, attributed to enhanced strategic cooperation with quality suppliers[17] - Long-term equity investments rose by 73.93% to RMB 1,482,875,050.61, reflecting increased external equity investments[17] - Short-term borrowings increased by 47.54% to RMB 10,383,337,457.23, necessitated by expanded operational scale[17] Research and Development - Research and development expenses for the first nine months were CNY 48.68 million, slightly up from CNY 48.33 million, indicating a year-on-year increase of about 0.7%[38] - Research and development expenses for Q3 2018 were ¥136,779.35, indicating ongoing investment in innovation[41]

Financial Performance - The company's operating revenue for the first half of 2018 was CNY 42.45 billion, an increase of 17.17% compared to CNY 36.23 billion in the same period last year[19]. - The net profit attributable to shareholders of the listed company was CNY 536.74 million, a decrease of 32.31% from CNY 792.99 million in the previous year[19]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was CNY 489.98 million, an increase of 20.54% compared to CNY 406.49 million last year[19]. - Basic earnings per share decreased by 40.82% to CNY 0.29 compared to the same period last year[20]. - Net profit attributable to shareholders decreased by 32.31% due to a significant increase in non-recurring gains from asset disposal in the previous year[21]. - The company achieved a total revenue of 42.449 billion RMB and a net profit of 558 million RMB, representing a year-on-year growth of 17.17% and a decline of 30.39% respectively[73]. - The company's main business revenue reached 42.358 billion RMB, with a profit of 3.411 billion RMB, reflecting a year-on-year increase of 17.54% and 18.93% respectively[75]. Cash Flow and Assets - The net cash flow from operating activities was -CNY 4.89 billion, a decline of 32.52% from -CNY 3.69 billion in the previous year[19]. - The net cash flow from operating activities decreased by 32.52%, primarily due to longer accounts receivable periods from hospital clients[21]. - Accounts receivable increased by 40.02% to ¥19,751,062,587.72 compared to the end of 2017, attributed to expanded sales scale and longer collection periods from hospital clients[48]. - The total assets at the end of the reporting period were CNY 57.59 billion, an increase of 10.64% from CNY 52.05 billion at the end of the previous year[19]. - The net assets attributable to shareholders of the listed company were CNY 18.77 billion, an increase of 2.56% from CNY 18.30 billion at the end of the previous year[19]. Business Operations and Market Position - The company has a total of 315,560 product specifications, including 52,910 Western and traditional Chinese medicines, 59,272 Chinese medicinal materials, and 183,993 medical devices[28]. - As of June 30, 2018, the company operated 1,246 retail chain pharmacies, including franchises[29]. - The company is expanding its traditional Chinese medicine business, covering the entire industry chain from R&D to distribution[31]. - The company has expanded its business scope to cover the entire pharmaceutical industry, with sales terminals reaching various levels of hospitals, clinics, and retail pharmacies, while also establishing an e-commerce platform[33]. - The company operates primarily under a market distribution model, focusing on grassroots medical institutions and retail pharmacies, which is characterized by lower gross margins and faster turnover[34]. - Jiuzhoutong is the largest private pharmaceutical distribution company in China, with sales exceeding 20 billion yuan, showcasing its competitive advantage through a flexible management structure and efficient decision-making[57]. Logistics and Supply Chain - The company has developed a logistics management information system and related value-added services, enhancing collaboration with upstream and downstream clients, contributing to stable business growth[32]. - The company utilizes a robust logistics and information network to ensure efficient order processing and timely delivery, with a service radius of up to 200 kilometers and delivery within 24 hours for longer distances[38]. - The company established 31 provincial-level pharmaceutical logistics centers and 94 municipal-level distribution centers, covering most administrative regions in China[51]. - 九州通 has invested in 125 pharmaceutical logistics distribution centers nationwide, enhancing its logistics capabilities and operational efficiency[52]. - The company provides integrated logistics planning solutions for pharmaceutical enterprises, enhancing supply chain efficiency and reducing costs[56]. Industry Trends and Challenges - The pharmaceutical distribution industry in China has seen a market size growth of 6.9% year-on-year, reaching a sales volume of 859 billion yuan in the first half of 2018[41]. - The industry is experiencing increasing concentration due to policies encouraging consolidation, which will enhance the competitive landscape[42]. - Stricter industry regulations are leading to the gradual elimination of non-compliant companies, providing expansion opportunities for well-regulated large pharmaceutical distributors[45]. Investments and Financial Strategies - The company issued short-term financing bonds totaling 5 billion RMB and super short-term financing bonds of 3.5 billion RMB to support business development[70]. - The company plans to issue corporate bonds totaling up to 1.2 billion RMB, pending market conditions[70]. - The total investment in the Beijing Jiunda Pharmaceutical Co., Ltd. production base project was ¥25,622.08 million, with expected sales revenue of ¥342 million upon completion[117]. - The company has invested ¥5,681.40 million in the hospital marketing network construction project, which is 98.59% complete[117]. Corporate Governance and Compliance - The company has committed to avoiding business competition with major shareholders and actual controllers, ensuring compliance throughout the reporting period[144]. - The company has no major litigation or arbitration matters during the reporting period, indicating a stable legal standing[147]. - The company has complied with necessary approval procedures for external guarantees and disclosed them as required by regulatory authorities[155]. Social Responsibility - The company has actively participated in social welfare activities, contributing a total of ¥1,919,600 in poverty alleviation efforts[157]. - The company has invested ¥175,600 in improving educational resources in impoverished areas[159]. - The company plans to continue its poverty alleviation efforts in the second half of 2018 according to its annual plan[162].

Financial Performance - The company's operating revenue for 2017 was CNY 73,942,894,403.06, representing a 20.12% increase compared to CNY 61,556,839,885.98 in 2016[21]. - The net profit attributable to shareholders for 2017 was CNY 1,445,510,102.24, a significant increase of 64.87% from CNY 876,741,815.27 in 2016[21]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was CNY 1,009,812,508.93, up 22.29% from CNY 825,743,826.51 in 2016[21]. - Basic earnings per share increased by 61.11% to CNY 0.87 compared to the previous year[23]. - The diluted earnings per share increased by 57.41% to CNY 0.85 compared to the previous year[23]. - The company's main business revenue reached 73.726 billion yuan, with a profit of 6.130 billion yuan, reflecting growth of 20.04% and 28.58% year-on-year[81]. - The company achieved operating revenue of 73.943 billion yuan, operating profit of 1.942 billion yuan, and net profit of 1.473 billion yuan, representing year-on-year growth of 20.12%, 85.63%, and 62.87% respectively[79]. Assets and Liabilities - The total assets of the company at the end of 2017 were CNY 52,048,353,548.93, a 34.39% increase from CNY 38,728,541,814.26 at the end of 2016[21]. - The net assets attributable to shareholders increased by 62.27% to CNY 18,300,435,644.59 from CNY 11,278,035,364.16 in 2016[21]. - The company's cash and cash equivalents increased by 63.10% to approximately ¥8.54 billion, primarily due to an increase in accepted bills[53]. - Accounts receivable rose by 55.42% to approximately ¥14.11 billion, attributed to expanded sales and longer payment terms with hospital clients[53]. - The company's asset-liability ratio was 62.46% at the end of 2017, down from 68.99% in 2016 and 69.78% in 2015, following a significant reduction after a targeted issuance in November 2017[155]. Cash Flow - The net cash flow from operating activities for 2017 was negative CNY 1,012,045,577.12, a decline of 334.67% compared to CNY 431,263,752.86 in 2016[21]. - The net cash flow from operating activities decreased by 334.67% to CNY -1,312,972,287, attributed to longer accounts receivable periods from hospital clients[24]. - The net cash flow from operating activities showed significant volatility, with figures of 436 million yuan in 2015, 431 million yuan in 2016, and a negative 1,012 million yuan in 2017[156]. Dividends and Profit Distribution - The company plans to distribute a cash dividend of CNY 1.00 per 10 shares, amounting to an estimated total of CNY 187,766,259.00 based on the total share capital as of March 30, 2018[4]. - The company has a cash dividend policy that mandates a cumulative distribution of no less than 30% of the average distributable profit over the last three years[160]. - From 2015 to 2017, the total cash dividends amounted to approximately RMB 401,877,485.40, representing 39.96% of the average annual net profit attributable to shareholders during this period[170]. Market and Industry Position - The pharmaceutical distribution market in China reached approximately ¥1.6 trillion in 2017, growing by 7.6% year-on-year[47]. - The company operates in the pharmaceutical distribution industry, with a total of 291,293 product specifications, including 50,827 Western and traditional Chinese medicines, 52,526 Chinese medicinal materials, 169,780 medical devices, and 18,160 food and health products[34][35][42]. - The company has established 31 provincial-level pharmaceutical logistics centers and 81 municipal-level distribution centers, enhancing its national sales network coverage[56]. - The company is actively pursuing mergers and acquisitions as part of its growth strategy in the evolving pharmaceutical landscape[142]. Risks and Challenges - The company has disclosed potential risks related to its future development in the report[6]. - The company faces operational risks related to its market-oriented business model and the emerging pharmaceutical e-commerce sector[151]. - The company is exposed to policy risks due to its operations in the pharmaceutical sector, which are significantly influenced by national and local policies[154]. Strategic Initiatives - The company plans to continue expanding its market presence and developing new products to sustain growth[24]. - The company aims to leverage its existing sales network in grassroots medical institutions to increase market share in this segment[73]. - The company is focusing on integrating internet technology and information technology into its operations, emphasizing the importance of supply chain integration and online-offline synergy[142]. Research and Development - Research and development expenses rose by 41.62% to CNY 799 million, reflecting increased investment in logistics technology and e-commerce[107]. - The company employed 960 R&D personnel, representing 3.81% of the total workforce[117]. - The company has made significant progress in drug consistency evaluation, with three products entering the pilot production verification stage[101]. Audit and Compliance - The company has received a standard unqualified audit opinion from the accounting firm Zhongshun Zhonghuan[4]. - The company has implemented new accounting standards effective from May 28, 2017, which require separate reporting of continuing and discontinued operations in the profit and loss statement[178]. - The company faced no major litigation or arbitration matters during the reporting period[184].

Financial Performance - Operating revenue for the first quarter reached CNY 22.21 billion, representing an 18.05% increase year-on-year[5] - Net profit attributable to shareholders rose by 19.20% to CNY 221.47 million[5] - Basic earnings per share increased by 9.09% to CNY 0.12[5] - The company reported non-recurring gains of CNY 13.87 million for the period[9] - The company reported a 48.22% increase in net cash flow from financing activities to RMB 4.29 billion, driven by new borrowings and short-term financing bonds[16] - The company recorded a 37.56% increase in selling expenses to RMB 690.78 million due to expanded sales activities[15] - The company reported a short-term loan balance of RMB 8.93 billion, up from RMB 7.04 billion, reflecting an increase of approximately 27%[25] - The total profit for Q1 2018 was CNY 115.66 million, up 88.36% from CNY 61.48 million in the previous year[35] Assets and Liabilities - Total assets increased by 15.56% to CNY 60.15 billion compared to the end of the previous year[5] - Total liabilities reached RMB 40.22 billion, up from RMB 32.51 billion, marking an increase of approximately 23.5%[26] - Accounts receivable increased by 46.08% to RMB 20.61 billion due to expanded sales and longer collection periods from hospital clients[15] - Investment properties rose by 59.81% to RMB 96.22 million as a result of property use changes[15] - The company's equity attributable to shareholders increased to RMB 18.49 billion from RMB 18.30 billion, showing a growth of about 1%[26] Cash Flow - The cash flow from operating activities showed a decline of 45.38%, amounting to -CNY 3.87 billion[5] - Cash inflow from operating activities totaled CNY 20.68 billion, compared to CNY 16.79 billion in the previous year, marking an increase of 23.36%[38] - Cash flow from operating activities showed a net outflow of approximately CNY 3.87 billion, worsening from a net outflow of CNY 2.67 billion in the same period last year[39] - Cash inflow from investment activities totaled $1,357,954,879.37, a significant increase from $327,653,977.80 in the previous year, reflecting a growth of approximately 314%[41] - Cash outflow for investment activities reached $2,476,486,378.04, compared to $472,407,098.59 in the same period last year, indicating a rise of about 424%[41] - Net cash flow from investment activities was -$1,118,531,498.67, worsening from -$144,753,120.79 year-over-year[41] - Cash inflow from financing activities amounted to $6,746,056,452.02, up from $5,107,781,531.89, representing an increase of around 32%[41] Strategic Initiatives - The company plans to issue corporate bonds up to RMB 1.2 billion to improve debt structure and reduce financing costs[16] - The company plans to enhance its market presence through strategic investments and potential acquisitions in the healthcare sector[16] - The company subscribed to 23,437,500 shares of Chongqing Taiji Industrial (Group) Co., Ltd., accounting for 4.21% of the total shares after issuance, with a total investment of RMB 360 million at a price of RMB 15.36 per share[22] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[31] Shareholder Information - The total number of shareholders reached 23,383, with the top ten shareholders holding a combined 66.32% of shares[11] - The controlling shareholder, Chuchang Investment Group, increased its stake by acquiring 108.735 million shares, representing 0.058% of the total share capital[21] - The company completed the repurchase and cancellation of 1.21585 million restricted shares, reducing total shares from 1,878,878,387 to 1,877,662,537[19] - The company has a one-year lock-up period for the subscribed shares of Taiji Group, preventing trading or transfer for 12 months[22]